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March 15, 2019

Non-filers not exempted from income source probe


March 15, 2019

KARACHI: Non-filers of tax returns are not exempted from probe into source of their income despite a recent lifting of ban on them to buy cars, sources said on Thursday.

The sources said non-filers purchasing motor vehicles will face difficult time despite recent approval by the government as the tax authorities have planned a prompt probe into source of their income.

The government allowed non-filers to purchase locally-manufactured motor vehicle of any engine capacity through Finance Supplementary (Second Amendment) Act 2019.

The restriction was imposed through Finance Act 2018, which caused hue and cry from various quarters, especially from auto assemblers.

Sources said the government is not in favour of any measure that promotes un-documentation of economy. They said any new car registered with a provincial motor vehicle authority by non-filers would immediately be screened.

The sources said the Federal Board of Revenue (FBR) established digital links to obtain data of registration from provincial authorities. However, if real-time data connection is not available then the FBR authorities would sort out information on the basis of withholding statements provided by the provincial authorities. An official at Regional Tax Office said compliant taxpayers declare their assets and income in their annual returns and there is a procedure of examination.

“But non-filers usually escape from the examination.”

The FBR collected Rs5.64 billion as withholding tax on registration of new cars during the first seven months of current fiscal year. The collection declined 5.8 percent when compared with Rs6 billion collected under the head in the corresponding period a year earlier.

The FBR sources said restriction imposed on non-filers didn’t seriously affect revenue stream as prices of locally-manufactured motor vehicles significantly increased during the period.

Local car manufacturers increased prices of their leading brands after massive depreciation of rupee against the US dollar. Rupee lost a quarter of its value over the last year. Car sales fell 4.5 percent to 162,692 units during the July-February period of 2018/19.

The sources attributed the revenue fall to decline in car sales. Revenue collection would rise at a faster pace as the government enhanced tax rate on purchase of locally manufactured cars by 50 percent for non-filers.

The decision was taken to promote domestic auto industry as non-filers still could not own imported vehicles.

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